Time to get rid of all federal taxes except a national sales tax. Our Rube Goldberg tax system has got to be the single biggest drag on economy. Imagine the money that goes into complying with taxes doing something constructive.
Congress wants to do these things, and the tax code is the easiest way to do them. Congress will STILL want to do these things even if you do fair tax.
If the fair taxers get their way, we'll likely end up with income AND vat 10 years down the line. Ech.
And you realize: Fair Tax would ALSO cover all investments? Buy a house: 40% to the governement. Buy stocks: 40% to the governemnt, etc.
Sounds to me like Congress is the problem.
The country has since degraded. Families have broken up over arguments about who should be elected, which laws should be passed, etc...
The current Fair Tax legislation is tied, not merely to abolishing income taxes, but also to repealing the 16th amendment. Last I read about it, it would not go into effect, even if it passed, until Congress lost all ability to levy income tax at all.
And FairTax has a pretty narrow conception of what constitutes consumption. Certainly not stocks, as you suggest. Investments in general are excluded. And any used items--used homes in your example--are excluded.
http://www.fairtax.org/site/PageServer?pagename=about_basics...
The income tax gives politicians tremendous power over the entire above ground economy and almost all the population, why would they give that up?
Since when have tax reforms in the West resulted in a wholesale replacement of one type of tax by another, instead of a layering? If you could point to a few exceptions I'd be interested.
How do I know the income tax will really be gone? Section I of the bill abolishes all income, estate, payroll and gift taxes, repealing sections A, B, and C of the Internal Revenue Code in their entirety. Sec 301 disbands and defunds the IRS, and requires that all its records be destroyed in a year. And sec 401 contains a sunset clause that negates the whole thing (both the sales tax and the abolishment of the income tax) if the 16th amendment to the constitution is not repealed within seven years. Thereafter, any attempt by congress to bring back an income tax would be, not merely unpopular, but actually unconstitutional. And they'd have to build up the infrastructure from scratch.
These guys are deadly serious.
Why would politicians give up power like that? Not sure. But there are a lot of them who say they'd be willing to: http://www.fairtax.org/cgi-bin/scorecard.cgi
Whether or not you think the Fair Tax is a good idea (and obviously I do), it's a model for how law ought to be made. In public, with a lot of visibility and discussion up front, a lot of time for question and answer, the full technical details exposed. The bill is not a tangled mess of amendments, but a well thought out and cohesive whole.
There's also the inconvenient fact that no Congress can tie the hands of a future Congress.
The only way to accomplish this in our system would be to get a single amendment to the Constitution that would simultaneously repeal the 16th Amendment and replace it with the FairTax, and then get 3/4ths of the states to ratify it.
Yes, it does apply to new houses. I'm sure builders are all over fair tax.
Financing a 30% more expensive house and paying for it out of a 30% bigger paycheck would be somewhere between neutral and a win for most people.
Nah, the sale of a used house is a totally private transaction. It's not as though there's a magical base price for a house of that size, and then a tax. It'll be sold for whatever the seller can get for it. If it's practically new, it might be the original price including the tax. Heck, it might be higher.
The original builder doesn't get to keep as much of the retail price as a subsequent private owner would. That's the distinction between new and used.
Nor is it as though buying a fixer-upper avoids the tax entirely. Materials and labor for renovations are taxed. That can be a significant portion of what's put into a home.
There's nothing inherently complicated about a progressive income tax; it's the fact that we insist on having a deduction for mortgage interest, R&D, asset depreciation, hiring new workers and hundreds of other things that all individually might be things we want to encourage, but together add up to a complex and cumbersome system.
The benefit is that you take the burden off the individual and leave it all to computers. There's a "Taxable" flag and the equation is simple. IF (item.category == Food or price < (select minprice from categorylimits where categorylimits.category = item.category)) then tax = 0 else tax = 0.25 * item.price
Done. What a beautiful world that would be.
The vast majority of tax cuts are really just government spending in disguise -- pork for a special interest group that gets allocated by the constituents' accountants instead of in a spending bill, and adding directly to the national debt instead of through the budget.
The logic is Microecon 101: Taxes are the equivalent to the a transaction+holding cost of using Uncle Sam's currency. Use gold, well, then you're paying to store and transport it. If Uncle Sam was smart about his paper, he would make the Federal Reserve into Federal PayPal, having the Federal Gov't charge, oh say, a 0.001% transaction fee on any exchange of US currency. Same difference, amirite?